Call to make mobile payments more transparent to consumers

Consumers should begin treating their cellphone bill like they do their credit
card statement and check all deductions. With the increase in ease of mobile
payments, especially via premium rate SMS subscription services, consumers
should scrutinise their bills just as they would their credit card statements.
If not they may be shocked by unexpected cellphone charges at the end of a
month.

Few consumers realise that their cellphone has become a payment mechanism. It
is a communications device plus payment gateway but consumers treat their
airtime with scant regard for how much money they may actually be spending on
premium rate mobile services, says Dr Pieter Streicher, managing director of
BulkSMS.com, a global mobile messaging company.

According to Dr Streicher there is a worrying number of consumer complaints
about mobile subscription services fielded by the Wireless Application Service
Providers’ Association (WASPA) despite the industry’s best efforts to ensure
wireless application service providers (WASPs) comply with industry regulations.

These complaints include incurring subscription billing without knowledge of
subscribing, once off content downloads that initiate weekly charges, the
difficulty in tracking down third party service providers and getting a refund
from these companies, and the fact that networks cannot unsubscribe a consumer
from a service. Complaints refer to joining mobile content clubs and also the
downloading of mobile content such as ringtones, music, videos and information.

Many of these complaints are due to a lack of understanding about how premium
SMS subscription services work as opposed to once-off downloads of content or
information via SMS. Another reason is the lack of transparency in the
presentation of cellphone bills.

Of course tracking mobile billings if you are a contract subscriber is easier
than if you are a pre-paid customer. Pre-paid customers have to request a
statement from their network or service provider. But even then contract
consumers need to have itemised billing before they can adequately check their
monthly cellphone charges, says Dr Streicher.

One place to start to ensure adequate consumer protection is to look at where
mobile payments can learn from the credit card industry. The criteria for
making a mobile payment via SMS should be made stricter and mobile service
providers should be able to reverse a transaction electronically.

Currently, for mobile subscription services a vendor only needs a cellphone
number to process a payment. Credit card payments, on the other hand, require
the customer’s name, the credit card number and the CCV number before a third
party can process a transaction. Furthermore, while a person under the age of
eighteen years cannot apply for a credit card from a financial institution,
parents are happy to provide their children with a cellphone. It becomes easy
for children to run up large bills on mobile content.

Another major difference between mobile payments and the use of a credit card
is that credit card companies can electronically reverse a transaction, this is
called a chargeback. Mobile subscription services do not have this ability and
a consumer has to wait on third party vendors, not the networks, to make good
on an SMS subscription service billing complaint. In many cases, due to the
small amount claimed this is given to the consumer as airtime and not a cash
payout.

“Consumers should empower themselves about premium rate SMS services before
engaging with them as well as check their billing for irregularities. Consumers
should query any charges they are not sure about with their network or service
provider. If there are unaccounted for billings then a consumer should act on
these and, where necessary, lodge a complaint with WASPA. There is a need to
ensure consumers feel that they have recourse when they feel they are wrongly
billed,” says Dr Streicher.

In Dr Streicher’s view the mobile industry needs to pull its weight in offering
consumers more protection when it comes to making mobile payments.

The mobile networks need to assess what is lacking in their billing processes
compared to the credit card system. The two areas which would immediately
improve mobile payment services are billing transparency and chargebacks. The
former will make it easier to identify the service provider offering
subscription services and the latter will enable service providers to offer
refunds where appropriate, says Dr Streicher.